Gregoire proposes new fuel tax to fund education

OLYMPIA — Gov. Chris Gregoire proposed higher taxes on gas, soda, candy and gum Tuesday in order to avoid more government cuts and to help fund education in response to a court order.

In her final budget plan, Gregoire said a budget without new revenues would force the closure of state parks, eliminate food assistance programs and cause additional cuts in education.

The new wholesale tax on gasoline and diesel fuel — paid by fuel distributors but likely passed on to drivers — would eventually rise to 4.62 percent. The governor also wants to extend taxes on beer and business taxes paid by doctors, lawyers, accountants and others.

“We need revenue if we’re going to meet our constitutional and moral responsibility to fund education,” Gregoire said. The total revenue from the new tax and tax extensions would be about $1 billion for the two-year budget cycle that starts in July.

Gregoire noted that the country’s top oil companies have made billions of dollars in profits this year, “so I expect them to do this without passing this on to consumers.”

She said she saw no other way to find the large amount of money needed to properly invest in the education system.

“Time is up,” she said. “There is no more recess.”

Gregoire said the candy and soda tax was a way to pay an award issued by an independent arbitrator in October to give pay raises to the state’s home-care workers.

“Do I think these people need and deserve raises? Absolutely,” she said. “I just can’t do it at this point. So I’ve tried to find a revenue source that had a direct nexus.”

Rep. Ross Hunter, D-Medina and chairman of the House Appropriations Committee, said Gregoire’s budget proposal “exposes the basic structural problems that will make it difficult to build an operating budget that meets the needs of Washington’s citizens and business community without changing the revenue picture.”

But House Republican’s point person on the budget, Rep. Gary Alexander of Olympia, said that the plan is likely “dead on arrival.”

“While I can see using a few of her budget reductions, I just can’t see the incoming legislature or the new governor using her overall budget or her tax increases as a starting point,” he said in a written statement.

Washington state Gov.-elect Jay Inslee will take office in January facing a projected $900 million deficit for the next two-year budget ending in mid-2015.

That doesn’t include money lawmakers will need to spend to improve funding for education as directed by the state Supreme Court earlier this year.

Inslee has said he will not raise taxes. Gregoire said a 2013-15 budget without taxes would have unacceptable consequences for people across the state and would hinder the state’s economic recovery.

“In the upcoming legislative session, Gov.-elect Inslee will lay out his own budget priorities that reflect his vision for state government and his commitment to create a lasting economic recovery with secure jobs for Washington’s middle-class,” Clifford wrote.

Republican Sen. Andy Hill, who would lead the chamber’s budget committee under a proposed GOP-led majority coalition, said Gregoire’s budget will be a point of reference as lawmakers try to build a sustainable spending plan.

Hill noted that the state will bring in $2.1 billion in more revenue during the next budget cycle, even without new taxes.

“It’s really a matter of, `How do we prioritize that spending?”’ Hill said.

Gregoire’s budget, even with revenues, does include some cuts. She proposes to block cost-of-living increases for teachers, saving $360 million, and cuts funding for local government programs by $57 million. Her budget totals $557 million in various cuts or savings. Her plan would also leave about $882 million in the bank.

Overall, Gregoire’s budget would total $34.4 billion in spending, up about 10 percent from the current biennium.

Gregoire said she knows that her budget proposal is not likely to stay intact throughout the legislative process.

“I think we have done an immense amount of work that will help them as they begin the deliberative process,” she said. “I don’t expect a rubber stamp. That’s not what they’ve ever done with anything I’ve produced.”

Gregoire said that she believes that lawmakers will find it will be difficult to do all that needs to be done with all cuts.

“The only way you can do it is with revenue,” she said. “So I’ve tried to give them a path to move forward.”